Lagos State has enjoyed the contributory pension scheme’s benefits as it was able to borrow from its funds.
The law stipulates that only states that fulfil the contributory pension scheme’s (CPS) terms and that have fully implemented the scheme in their states can access the funds available in the scheme.
Though five other states and the federal capital territory (FCT) are eligible to access the scheme’s funds through the sales of bonds, only Lagos State explored this source of funding. Data shows that Osun, Kaduna, Rivers, Niger, Ekiti and the FCT are all eligible to access these funds.
Source: Pension Commission Annual Report, 2021
However, the majority of states cannot access the pension funds due to their non-compliance with statutory contributions to the pension scheme.
Data from the Pension Commission (PENCOM) shows that Lagos State is one of the few eligible states that has fulfilled most requirements.
Source: Pension Commission Annual Report, 2021
Pension fund provides states and the federal government (FG) access to funds in the face of revenue shortages. In addition, it provides a special category of funds to the government for infrastructural development.
The fund not only provides an alternative source of funds to the state governments in the face of low revenue generation, but it also offers this at fairer and more flexible rates.
The pension fund asset grew from N12.31 trillion in 2020 to N13.42 trillion in 2021. This represents a 9.02 per cent increase in the total asset held by the commission.
A breakdown shows that the federal government held most of these funds, as N8.83 trillion were held as securities.
N1.97 trillion was held as money market securities, N1.04 trillion as ordinary shares, N930.74 as corporate debt securities, and N178.81 as state government securities.
Others include N156.55 billion held by real estate, N112.18 billion in mutual funds, N75.06 billion in infrastructure funds, N40.52 billion in private equity funds, and N84.59 billion in cash and other assets.
As of the end of 2021, state governments held only 1.33 per cent of the funds as investments. But there has been some controversy regarding the possible misuse of pension funds if state governments are allowed to access them.
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